Property transactions in Bermuda could soon become faster and less complex as Government plans to introduce a Land Registration Office.
Primary legislation has already been enacted to support the move from a deeds-based system to a registration system, but the legislation is not yet in force because secondary legislation – designed to set out the operational details of the new system – has not been enacted.
A registration system will avoid the current paper chase for deeds, resulting in dealings with fewer Government departments than is now the case. Ultimately, the legislation anticipates that property transactions will eventually go online.
At present, all real property is unregistered with the exception of Government-owned land, which is in a shadow system, to become live when the new legislation comes into force.
Once the legislation is in force, all other real property shall compulsorily become registered, in due time, by "trigger events". Such events include the transfer of property by purchase, gift, court order, after death, partition, appointment of a new trustee, long lease and mortgage.
Registration is to be required prior to application for subdivision, for primary homestead designation, and the formation of a condominium under the Condominium Act 1986. Government has also reserved power, in the legislation, to phase in compulsory registration without the need for a trigger event.
Today, an unregistered property owner proves title through at least 20 years worth of good paperwork, known as deeds. Deeds should be kept safe, as if they are lost or damaged, a property can become unmarketable, and therefore less valuable and unmortgageable. The result is that property falls into disrepair, causing a loss to the economy and of precious housing for the community.
After registration under the new system, title is to be kept at the Land Registration Office and so deeds generally shall not be required. On request from time to time, the Land Registration Office shall provide evidence of ownership of a title, by way of a title document called an "Official Copy".
A Government scheme may provide compensation for inaccurate registration, resulting in loss. Compensation may not be payable in case of fraud, or lack of care. A compensation scheme is important, as there is no defective title insurance market in Bermuda, due to the inherent dangers in a deeds-based system.
On registration, a class of title is to be given, with "absolute" the best, most marketable and mortgageable title. Absolute title is expected in most cases because most deeds are in good order, having been stored with attorneys or banks.
A "provisional" class of title can be provided if deeds are lost, damaged, or in poor order. A provisional title is less marketable, but after 20 years of registration, a provisional title can be upgraded to absolute, thereby bringing potentially worthless property back into the economy and community.
The possibility of title upgrade may prompt Bermuda insurance companies to develop insurance products to assist with the marketability of provisional titles. The Land Registration Office is to maintain a plan showing boundaries of titles, to be known as the "Index Map", which is to be based on satellite maps. Boundaries shown on the Index Map are indicative and not conclusive. For this reason, owners should keep a copy of their deeds, as most have careful boundary descriptions.
In addition to the owner, others may have rights over property. For example, banks through mortgages and further charges, and neighbours through easements to walk or drive. These rights shall be registerable, as affecting the land – and indeed if not registered, such rights may be lost.
For practical purposes, registration does not cover every interest in property. Such interests are called "overriding interests" and include short-term tenancies and rights of those in actual occupation, such as spouses. Overriding interests should be obvious on a physical inspection of a property.
As a practical step, property owners and potential property owners should ensure that their details are up to date on the Register of Bermudians, maintained by Immigration. The reason being, the Land Registration Office must refuse to register owners who fail to demonstrate Bermudian status, or who cannot produce a License from Immigration.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
